Barclaycard has released their quarterly consumer spending statistics for Q2 2017. They reveal some interesting findings when it comes to British spending habits – and indeed how shrinking wage growth and inflation have made us all think twice and spend once. As we become a shrewder nation, what does this mean for the demand for credit, and for our bank balances in general?
According to Barclaycard’s data, consumer spending growth slowed to 2.5% in June – a 15 month low. This was caused by price increases on everyday essentials, leaving less disposable income for luxuries. However, it would appear that the time of year and hot spells of weather have helped guard the leisure industry against consumer spending cuts.
Attitudes to spending are adapting to the “new norm” of squeezed wage growth – but how long are people prepared to go without? According to the latest information by Markit, Brits are the gloomiest they have been about their finances since the recession.
According to the Bank of England’s borrowing data for April 2017, borrowing mania has slowed since January and net mortgage lending is down. Unsecured borrowing on credit cards has stabilised as well.
But, not all debt is bad and actually the economy needs a little bit of it in order to survive. The lack of borrowing in the first three months of the year was responsible for the dip in GDP growth from 0.7% to 0.2%. What’s more, the mortgage market needs to stay afloat to protect the investments of those already living in properties and to stop the housing market from crashing in a similar style to 2008.
Despite this demand for credit seemingly stalling, lots of experts do not predict that this is for the long term. Debt charities research shows that people are prepared to take more credit in order to accommodate the gap in slow wage growth and with 3.3 million in “persistent credit card debt”, it is possible that Britain could continue this way for years to come.
If you would like some further advice relating to insolvency or debts, please contact me via the details below.